Monday, August 20, 2007

We're #1

BRUSSELS – The Belgian tax burden on low salaries is higher than in any other industrialised country, according to a new international comparison by the European Commission.

The European Commission used a test case for each country to figure out the fiscal burden on low wages. This indicated that the wage wedge, the difference between what the employer pays out and what the worker takes home after social security contributions and tax, can be as much as 49.2 percent of labour costs. This is the highest percentage of all 24 countries that the European Commission studied.

The comparable wage wedge in the Netherlands is just 40.6 percent, and in Luxembourg only 30.6 percent. Figures for France (44.5 percent) and Germany (47.4 percent) are in the same neighbourhood as the percentage for Belgium.The heavier the tax burden on the lowest wages, the smaller the incentive for unskilled unemployed people to seek a job. Working is only worth their time after all if the difference between net wages and benefits is large enough.